The tool brands use to develop customer loyalty is often their rewards program. Designing the rewards program is sometimes treated as one and the same as designing for loyalty development - meaning, growing customer spending, engagement, and retention over time. After all, the outcome of a rewards program journey is customer loyalty, isn’t it?
After all, the outcome of a rewards program is customer loyalty, isn’t it?
Not always, and focusing on program mechanics as the tactics to develop customer loyalty is a business-centered approach that loses sight of of why customers love the brand in the first place.
Rewards programs that are based on high frequency “earn and burn” points and benefits can end up developing shallow transactional loyalty (“I choose shop here because I get extra savings”) without an emotional payoff, so as soon as another brand offers better transactional benefits, the customer will switch.
*Important note! A few brands (like Kohl's) that heavily emphasize earning and burning rewards DO create an emotional payoff by demonstrating frequently that the brand shares the customer's goal to save money.
Deeper emotional loyalty is earned through a customer’s experiences with a brand, not through rewards. Customers love a brand and continue to do business with it because they love the products, they love the customer experience, and they love how interacting with the brand makes them feel.
It's worth clarifying - rewards programs are most successful when they are used to recognize and celebrate a customer's loyalty, but the program itself doesn’t create loyalty.
Points and transactional benefits are great at incentivizing specific behaviors, but they won’t acquire a customer or develop brand love (this goes against internal thinking sometimes, and can be tough to say to brands that have invested a lot in these programs!).
Instead of designing a rewards program journey, brands should create a customer loyalty journey that shows how the relationship with the brand deepens over the entire customer lifecycle, and where and how the program touchpoints help nudge behavior and move the needle at specific points.
About Ann
Ann is the founder of Amplify and has a background in product innovation and service design. She is experienced in leading research and strategy projects on complex questions, designing data-driven experiences, and developing user-centered mindsets and skills within organizations.
Ann is the founder of Bird, a coaching platform for everyday runners, that was a member of TechStars 2020 and acquired in 2023. Ann lives in Chicago with her family and their two dogs, Ruthie Bader Ginsburg and Cosimo de' Medici.
